When considering this alongside changes in market cap and price, it found a foreshadowing effect. A move in market cap accompanied by a spike in sentiment was likely to predict a further market cap move within eight to 12 days.

Manipulating sentiment for gain

Sentiment spikes were often found to occur either before or at the time of price drops. Market cap rises are often followed by FUD (fear, uncertainty and doubt) on social media, potentially causing a decrease in price. This leads to the possibility of deliberately spreading FUD to buy USDT with a discount when price falls, and resell when the price normalizes.

If allegations that Tether manipulates Bitcoin via its market cap are true, then being able to predict Tether’s market cap moves by measuring sentiment would be a useful signal.